The Episode of the Platinum Coin

We first began to hear of the $1 Trillion Platinum Coin solution to the debt ceiling earlier this month from people like Joe Weisnethal at The Business Insider. Soon there was speculation from commentators at staid, reliable sources like The EconomistThe Atlantic, and The New Yorker.   The idea was that there was an obscure law that would effectively permit the Secretary of the Treasury to bypass the debt ceiling by minting its own money. Most of the discussion was about the legality of it all. It turned out that it was, in fact, legal.

The Secretary [of the Treasury] may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

Now, if we still lived in a world of print journalism, the Platinum Coin solution might have remained an interesting idea. Not an idea to be taken seriously, however.

Of course, in the world of instantaneous internet communication what really happened is that the Platinum Coin story went viral and all sorts of people, including Nobel Prize winning economist, Paul Krugman,  were taking it very seriously. In fact, Krugman attacked comedian Jon Stewart for not taking the idea seriously followed by Stewart attacking Krugman for attacking him….
The whole farce ran its course when the Obama Administration was forced to state officially that it rejected the $1 Trillion Platinum coin solution.

The roller coaster ride that was the “episode of the platinum coin” is instructive. Ideas are floated, commented upon, and either accepted or rejected before most of us have had a chance to digest them, let alone think deeply about them. And, who do we look to for reliable information: a Nobel Prize winning Economist, or a comedian, or any of the other “voices” available to us on-line? I did a Google search for “the trillion dollar solution” and got 88,700,00 results in .19 seconds.

trillion_dollar_coin

A search for “Platinum Coin Debt Ceiling” resulted in 74,700,00 hits in .25 seconds.

platinum_coin_debt_ceiling
What do I do with that information glut? Back in the days of the Progressive Era there were journalists who served as “muckrakers”, exposing social ills to the general public. If public outcry reached a critical mass, legislation would result. But, the process would take years. Today the outcry is practically instantaneous and policy makers are forced to rush to judgement.
Update:  A colleague sent me this:
main-qimg-ac9751e78dfcb4895ae208fb69315568
The Federal Reserve, several decades ago, authorized the printing a $100,000 bill with Woodrow Wilson on the face. This bill wasn’t meant for public consumption. Instead, it was used by the Federal Reserve to settle internal accounts among government agencies and its member banks. It sounds like the same idea as the Platinum coin, just a different denomination. I guess even the craziest ideas are not new.
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